(CSOP) Formal Approval

First steps

Options can only be granted after Formal Approval has been given to a scheme by the HMRC. Formal Approval is given when HMRC is satisfied that the scheme rules (including ancillary documents) are in line with the relevant legislation for the particular scheme type.

The Employee Shares and Securies Unit are happy to review draft scheme documents prior to you submitting these for Formal Approval.

Please send us the draft scheme rules, ancillary documents, Articles of Association and any Investors or Shareholders Agreements for review as soon as you can. We will comment on the documents and let you know when the documents are capable of Formal Approval. Once this format of the scheme has been adopted by the company, it may then be submitted to us for Formal Approval.

We have developed a Checklist (RTF 56K) which outlines the statutory requirements that must be included in a scheme before approval can be granted.

There is also a model form of Rules that can be used, this is contained in General information on Company Share Option Plans (CSOP) for employers and advisors. The company may of course wish to use its own scheme rules however these must also contain the criteria shown on the checklist.

The companies Articles of Association must fulfil a number of requirements. Please see Articles of Association).

At all stages in the approval process if changes are made to the documents please ensure they are clearly marked so that we can deal with them as quickly as possible for you.

Ancillary documents

These include the letter of invitation, letter of acceptance, the letter notifying the grant of an option, option certificate, explanatory booklet and all other documents to be used within the plan including documents relating to broker assisted or cashless exercises.